What Will Become of the ACA? The Few Details We Really Have...

What Will Become of the ACA? The Few Details We Really Have...

Authored by: Michael Gomes

If you've been on pins and needles waiting for a detailed description of the plan President Trump and congressional conservatives have created to “repeal” and “replace” the Affordable Care Act (ACA), you probably thought the answer had arrived as President Trump addressed the joint session of congress last week.  You may have thought wrong.  Just yesterday, House Republicans unveiled their long-awaited legislation that “repeals” and “replaces” the ACA with only some similarities to the President’s outline.

For more than 6 years, there has been a consistent Republican outcry to repeal the ACA.  You would think that with that much time to design a replacement plan, and with Republicans having Senate and House majority along with a President of their own party – the solution would be simple.  But it’s not.  There continues to be fractions within the Republican party that might make the latest efforts a challenge.

Starting with an Executive Order the day President Trump took office, we knew that repeal of the ACA was going to be at the top of the Administration’s agenda.  Shortly before last week’s Presidential address to Congress, a leaked version of the legislation began to be circulated which was quickly dismissed by House Republican leadership.  Then yesterday, an official version was released by the House.

As we have previously shared, any repeal legislation will most likely be in the form of a reconciliation bill to allow for special fast-track procedures. Since Senate rules generally prohibit the use of reconciliation for measures that have no effect on spending or revenue, the legislative draft would most likely leave the most popular provisions of the health law intact such as the prohibition on insurers’ denying coverage to people with pre-existing conditions.  This is exactly what we are now seeing.  Let’s take a look at what’s in and what’s out.

Referred to as The American Health Care Act, key elements of the House legislation include:

•    An elimination of the Individual and employer mandates penalties.  
•    Expanded limits on health-care savings accounts.
•    Repeals insurance actuarial value standards.
•    Loosens age-rating requirements to a 5:1 federal standard and state flexibility to set different ratios.
•    Repeal of Medicaid expansion.
•    Repeal of Obamacare taxes.
•    New tax credits would replace exchange subsidies driven by age vs. income.

As expected, many of these changes will not take place for a number of years to provide stability in the individual and group markets. In addition, the proposed legislation has many more details that will also help to keep these markets stable.  For example, although the individual mandate would be eliminated, individuals wanting to buy health insurance would have to show proof of continuous coverage or pay a premium penalty.  The question we all have is whether the changes and delay in implementation will have the desired affect.  Will they cause a continuation of the cost spiral or help to bring premiums down to a more affordable level?  How will consumers react?  Carriers?  Each of these questions will be answered over time.  

Just as the ACA was a partisan effort where Democrats “went at it alone,” Republicans are doing the same thing to meet the restrictions of reconciliation.  But unlike the first time, consumers are now much more knowledgeable and are now an even louder voice in the debate.  And unlike before, not all Republicans are onboard. But the pressure is on. With so much riding on “repeal and replace” we need a more bipartisan approach to a solution.  Being either “for it – or against it” is not a way to proceed.  Working together, Congress can (and should) devise a plan that “repairs” the ACA. 

Whether as a business owner or a trusted advisor such as brokers and CPAs, it is important for you to keep everyone aware of what is required under our current legislation. There no doubt will be countless discussions and analyses by many stakeholders over the coming days and weeks. Until we have a better understanding of what will ultimately “replace” the Affordable Care Act, current ACA legislation is the “law of the land” and you would be prudent to ensure your business and clients are following the reporting and compliance requirements accordingly.  Introduction of the House bill is step one in a long tedious process, so keep checking back to HealthcareExchange.com often so we can keep you informed along the way.

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